2 Googles: 1 for Europe, 1 for everyone else

Craig Timberg

Saturday

Apr 27, 2013 at 12:01 AM

There soon could be two Googles: One built for Europeans, with links to rival search engines and labels alerting users whenever Google is featuring its own products. And another version for everyone else, with none of those consumer-friendly features.

The variations would result from what amounts to a split decision in two high-profile antitrust investigations into the California-based search giant, one by U.S. regulators, the other by Europeans.

Google emerged from the Federal Trade Commission's probe in January with only modest concessions as U.S. officials essentially dismissed the most serious allegations of monopolistic behavior - namely that the company manipulated search results to benefit its services.

But European regulators took a tougher line Thursday, making a preliminary ruling that Google may be abusing its dominance over the search industry. The victims, the European officials said in a break with the FTC's ruling, were not merely rival companies but consumers, who would benefit from a freer marketplace.

"The Commission considers at this stage that these practices could harm consumers by reducing choice and stifling innovation in the fields of specialized search services and online search advertising," European regulators said in a statement issued Thursday.

To ease this impact, Google has agreed to make a series of changes to ensure that users understand the difference between neutral results - generated by search algorithms - and ones for which Google profits more directly, either through payments from advertisers or by enticing users toward one of the company's other offerings, such as its shopping or travel services.

Google's rivals, whose complaints sparked the investigations in Europe and the United States, were quick to criticize the proposal as too weak as they prepared to push for bigger changes in a comment period scheduled over the next month. At the same time, however, they grumbled that the FTC should have required Google to at least make the same concessions for users in the United States.

"The Federal Trade Commission looks like a weak sister here," said Gary Reback, an attorney for competitors of Google who has criticized the FTC's handling of the case. "Europeans will have more choices than Americans."

The Europeans addressed this issue directly in a Q&A, noting that Google's market share in Europe is higher than in the United States - about 90 percent in Europe compared with roughly 67 percent here - making the legal case on monopolistic behavior easier. Europe's regulators also have tighter antitrust laws and are less likely to be overturned by an appeals court, legal experts says.

The FTC declined to comment. Former chairman Jon Leibowitz, who oversaw the unanimous Google ruling before resigning in February, did not respond to queries about the action of European regulators.

Google spokeswoman Samantha Smith said, "We continue to work cooperatively with the European Commission," but she declined to comment further.

European regulators released the 61-page settlement proposal from Google, including mock-ups showing how results pages could change. Although such Web pages once had only a series of blue Web links generated by algorithms, Google has for years increased the percentage of its pages filled by paid advertisements and links to its services, such as Google Shopping, Google Places and Google News.

The proposed changes are not so dramatic that an American signing on to Google from Paris would be startled by the differences. But through a series of subtle cues - outlined boxes, altered wording and links that lead users to competing search engines - European regulators aim to give users more information. The most noticeable changes are proposed links to other specialized search engines, such as shopping or travel search sites, giving consumers an easy way to move from Google in a quest for better results.

Critics said these links, which Google would sell in auctions, don't give nearly the prominence and visibility enjoyed by the company's product links, which include pictures and prices when users search for cameras, televisions or other shopping items.

David Vladeck, a Georgetown University law professor and former head of consumer protection for the FTC under Leibowitz, declined to directly address comparisons between the approaches of the different regulatory bodies but said the proposed changes to results pages would not dramatically change how most users experience Google.

"I don't think at the end of the day it's going to make much of a difference," Vladeck said. "These are essentially cosmetic changes."

The European settlement proposed by Google acknowledges no wrongdoing and would trigger no fine, although if the company later violated the terms of an agreement with regulators, they could impose a levy equal to 10 percent of global revenue.

The proposal also includes new limits on the search engine's ability to aggregate and display content produced by other companies, and it requires that marketers be able to easily move their ads to rival services. These changes resemble concessions Google made to the FTC as it closed its investigation.

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Google to change search in Europe

The change: Google has agreed to change how it displays search results in Europe, including better labels of its promoted content and displaying links to competitors.

Antitrust: Google is making the change to appease concerns it might be abusing its dominant market position in Europe. The European Union's antitrust authority has since 2010 been investigating whether the company is unfairly stifling competition.

Pilot: The EU Commission is proposing a market test of Google's concessions for a month. That would give competitors the chance to say whether they deem them sufficient.

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